Addressing the Skeptics of Bitcoin: Where You’re Wrong and Where You’re Right

Steve Eisman, who was portrayed in the movie Big Short, now Managing Director and Portfolio Manager at Neuberger Berman, said this in an interview with CNBC about bitcoin and other cryptocurrencies, “I have my doubts about it. My doubts center around the fact what’s the social utility of cryptocurrency?…It’s good for speculation and good for money laundering. … I have no idea how to value [bitcoin] and I don’t think anyone else does either.” Another well-known skeptic of cryptocurrency is Peter Schiff, CEO and chief global strategist of Euro Pacific Capital Inc. who said this on JRE podcast #1145 , “I don’t think any of these currencies can ever be stable because there’s no value to stable them. There’s no value to store. The only cryptocurrencies that would work are cryptocurrencies that are backed by a real commodity, like gold.” Other big shots in the financial sector like Jamie Dimon and Nouriel Roubini have even worse to say about the matter. Here are the biggest arguments put forth by the skeptics of bitcoin and why they are wrong:


Beginning with the definition of a ponzi scheme, which is “a fraudulent investing scam promising high rates of return with little risk to investors. The ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. For both ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around, and the schemes unravel.” By definition, bitcoin isn’t a ponzi scheme because its designed purpose was not to be a fraudulent investing scam, the “scammer” in this case (Satoshi Nakamoto, creator of bitcoin blockchain) had no intentions of exploiting new investors, and bitcoin will always exist regardless of the amount of money going around so there can’t be any “unraveling” of the “scheme”.

Satoshi Nakamoto did not develop bitcoin to institute a get-rich-quick scheme by scamming others. HOWEVER, that is not to say all other cryptocurrencies are not ponzi schemes because there are certainly a lot that have been created to operate as such. Nakamoto released the bitcoin whitepaper in October of ’08, which states that the purpose of creating bitcoin was to enable “a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution” and to “propose a solution to the double-spending problem using a peer-to-peer network.”

If bitcoin was created to be a ponzi scheme, Nakamoto would’ve cashed out a long time ago. However, Nakamoto hasn’t because he/she/they has mined and still owns approximately one million bitcoin according to an in-depth technical analysis done by Sergio Demian Lerner. Also, creating the bitcoin blockchain was an amazing feat in and of itself, “writing something as complex as Bitcoin is no small feat: besides the novel cryptography, Bitcoin 0.1 included a custom peer-to-peer protocol, a special purpose scripting language, wallet functionality, and a GUI. Apparently very few people actually downloaded and ran Bitcoin in 2009. It would have been easy to give up on the project, particularly considering that Bitcoin is a network whose value is derived from its users. Thankfully that’s not what happened, and Satoshi was able to run the network long enough to build a user base.”


Nouriel Roubini, aka “Dr. Doom”, warned back in early February of this year that bitcoin is the “biggest bubble in human history” and that the price will go to zero. Bear in mind, this is the same guy that says the only use for blockchain technology is cryptocurrencies and that it’s a scam. Regardless, let’s investigate as to whether or not bitcoin is in a bubble and the probability of the price actually going to zero. Beginning again with the definition: “a bubble is an economic cycle characterized by the rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive sell-off occurs, causing the bubble to deflate.” Was bitcoin in a bubble during the run up to 20k? Of course. Has it been in a bubble before? Multiple times, five in fact where price declined by 50% or more.

These bubbles are nothing to worry about, we all know that bitcoin is very volatile given that it hasn’t even reached 10 years old yet (Nakamoto mined the first bitcoins on January 3rd, 2009). There will be more bitcoin bubbles, more price cycles, as this is a market heavily dominated by speculation. However, in my honest opinion, I don’t think we’ll see any of these future price cycles hit a price of zero or anywhere close to that. This is because the price never went to zero during any previous bubbles, at a time when the market cap and trade volume of bitcoin was significantly lower than today. We’ve also been seeing higher lows with the price of bitcoin. Additionally, bitcoin has amassed more supporters of its concept, many investors have joined the market or are closely eyeing it, and intelligent people from around the world are adding their value to a lot of projects in the space.

So, going back to zero becomes less likely because there would need to be billions of dollars and millions of people pulling out of the market, financially and intellectually, for such a dramatic decrease in price to occur. Most importantly, bitcoin has begun to take back majority of the market dominance, now sitting at 48.8%. The cryptocurrency market, especially bitcoin, is of course highly speculative which will induce bubbles. However, this isn’t a good argument to make against bitcoin because trying to predict such a doomsday future (or a utopian future for that matter) of any market that’s in its infancy is foolish.


Peter Schiff, who you’ve probably heard of if you follow the crypto space closely as he has been interviewed and in debates multiple times about the subject, loves gold and argues bitcoin will never replace gold as a store of value because bitcoin itself has no value. He takes much offense to those who sell the description of bitcoin as digital gold. Schiff argues instead that bitcoin is fools gold, and “BTC does have similar properties, but that its being math and not physical means it ultimately lacks real utility.” There are multiple counter arguments to the statement that “bitcoin has no value and no use case.” Such arguments can have a post of their own, but in short bitcoin’s value gives thanks to the characteristics of the blockchain: decentralized, immutable, trustworthy, secure, etc. Also, bitcoin has a limited supply and is created through mining, both of which add value.

What I’d rather focus on right now is the utility value of bitcoin, because the values that bitcoin offers are all great and dandy, but if the values of bitcoin aren’t applied then bitcoin’s promises only exist as conceptions. Reverting back to the bitcoin whitepaper, the purpose of creating bitcoin was to enable “a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution” and to “propose a solution to the double-spending problem using a peer-to-peer network.” So how is bitcoin today acting out its purpose that Nakamoto created it for? So far so good, seeing as how I can receive and send bitcoin without a financial institution involved (i.e. send using a private key and receive using a public key, done through a software wallet). To clarify, third parties are involved, seeing as how bitcoin is digital and one needs a software application to actually transfer bitcoin. The existence of third parties does not take away any value from blockchain technology or bitcoin, so long as they are decentralized.

So bitcoin exists and operates as it should, but besides using it to purchase other cryptocurrencies, are there any other applicable uses for bitcoin right now? The late silk-road black market gave bitcoin its popularity because it gave utility value to bitcoin because it was a perfect medium of exchange for such a market. Thankfully, today there are reputable and well-established entities that exist which accept bitcoin as a payment in return for a product or service. Many free-lancers accept bitcoin, as well as online retailers like and The TV provider DISH allows its customers to pay with bitcoin, so too does As for in-store payments, the adoption of bitcoin as a medium of exchange is still developing.


Perhaps the most viable argument I hear skeptics of bitcoin make is that since there are hundreds of cryptocurrencies in the market, what is stopping one of them from overtaking bitcoin? The argument continues by stating the fact that bitcoin is ranked number one because it has the first blockchain, which is the longest and most secure. The argument ends with the notion that there are cryptos out there that can perform better and deliver more functionality so it is quite possible for bitcoin to be dethroned. Then, a significant devaluation in price ensues.

The reason I find this argument by skeptics most viable is because the probability of it happening is likely given today’s environment. Bitcoin, in order for its value to survive outside speculation (which must happen), needs to exist as a major store of value or it needs to be adopted by major retailers as an acceptable form of payment. Otherwise, I see bitcoin being replaced. If bitcoin can be replaced, then any crypto taking the number one spot can be too. Leading to a loss in value for all cryptos because there is no stability in the market. There wouldn’t exist a dominant cryptocurrency which all other altcoins can reliably base their value off of. The sooner bitcoin removes itself from the dominance of speculation the better.


As argued above, bitcoin is not a ponzi scheme, arguing that bitcoin is in a bubble is irrelevant, the likelihood of the price of one bitcoin reaching zero is highly unlikely, bitcoin certainly contains value, bitcoin certainly can be used as it was designed to be used for, and a dethroning of bitcoin will not happen any time soon given its current market dominance. So, what validity do skeptics of bitcoin have?

First of all, bitcoin is merely a preference being used (besides trading) by people who don’t trust centralized authorities and have a beef with financial institutions plus the current monetary system. So there’s an argument to be made that bitcoin may never see its light of day and reach its full potential because the current system we have (in the U.S. and other developed countries) functions well enough that it doesn’t need to be revolutionized by bitcoin or any other cryptocurrency. There is no need to adopt bitcoin as there’s no urgent problem which it can solve.

Secondly, blockchain technology still has many improvements to be made. The bitcoin blockchain right now simply cannot process the number of transactions it will need to make if it were to be used regularly as a medium of exchange by many people. The argument that bitcoin cannot replace the U.S. dollar, the euro, or the yen, etc. is true for right now. Fortunately, there are brilliant people working on the bitcoin blockchain and many other blockchain projects and cryptocurrencies to fix any flaws the technologies have. This article is an easy read to understand the issue of blockchain scalability along with proposed solutions.

This tweet last month by none other than Vitalik Buterin sums up nicely the kind of market cryptocurrency is in right now, and where it should be heading, “I think there’s too much emphasis on BTC/ETH/whatever ETFs, and not enough emphasis on making it easier for people to buy $5 to $100 in cryptocurrency via cards at corner stores. The former is better for pumping price, but the latter is much better for actual adoption.” The reason there’s too much emphasis on bitcoin ETFs right now is because bitcoin is primarily used to buy other cryptocurrencies and then sell for profit.

I’m going to confess this many times: yes, bitcoin is a speculative asset and yes, the cryptocurrency market as a whole is majorly speculative. However, I believe this is only temporary. The future of bitcoin, whether it will fail or succeed, is what separates the skeptics from the advocates. Some remain hopeful that progress will be made and adoption is right around the corner. Others believe no progress can be had and that it’s a waste of time contemplating whether bitcoin can or will replace gold as a store of value or replace fiat currencies as a medium of exchange. In my opinion, I don’t think people should strive for bitcoin replacing these things. Rather, advocates should push bitcoin toward the path of excellency so that it can be a viable alternative in the future.

As an end note, and something to keep in mind, this technology and this market is still young. There is a lot of improvement to be made, and some has already been done. It’s foolish to hope for change over night so only time will tell the success, or possibly failure, of bitcoin.